Governments need to move faster and more decisively on policy measures to enable low-carbon hydrogen to help the world reach net-zero while boosting energy security.
This is according to the latest report released by the International Energy Agency (IEA), Global Hydrogen Review 2021, that states the nascent hydrogen market is on the cusp of significant cost declines and widespread global growth.
Currently, 17 governments have released hydrogen strategies, and more than 20 others have publicly announced strategies are in the works. Furthermore, growing numbers of pilot projects are underway to use hydrogen to decarbonize hard-to-abate sectors such as steel and transportation.
“We have experienced false starts before with hydrogen, so we can’t take success for granted. But this time, we are seeing exciting progress in making hydrogen cleaner, more affordable, and more available for use across different sectors of the economy,” said Fatih Birol, IEA Executive Director, who launched the report at the Hydrogen Energy Ministerial Meeting hosted by Japan.
“Governments need to take rapid actions to lower the barriers that are holding low-carbon hydrogen back from faster growth, which will be important if the world is to have a chance of reaching net-zero emissions by 2050.”
The main obstacle to driving the use of low-carbon hydrogen is the cost of producing it, according to the IEA. Production requires either large amounts of electricity to produce hydrogen from water, or the use of carbon capture technologies if the hydrogen is produced from fossil fuels.
Investments and focused policies are therefore needed to close the price gap between low-carbon hydrogen and emissions-intensive hydrogen produced from fossil fuels.
Another key issue identified in the IEA report is that policy action so far focuses on the production of low-carbon hydrogen, while the necessary corresponding steps that are required to build demand in new applications is limited.
To address these issues and support governments in taking decisive action, the Global Hydrogen Review lays out a series of recommendations for near term-action beyond just mobilizing investment in research, production, and infrastructure.
It highlights that governments could stimulate demand and reduce price differences through carbon pricing, mandates, quotas, and hydrogen requirements in public procurement.
In addition, international cooperation is needed to establish standards and regulations and to create global hydrogen markets that could spur demand in countries with limited potential to produce low-carbon hydrogen and create export opportunities for countries with large renewable energy supplies or large CO2 storage potential.
The report is available online.